It’s tough to read any business articles or attend a conference today without hearing the term “Best Practices”.  Sounds great, right?  I want my organization to be using the best possible processes and practices available.  If I do, I should be “optimized” and happy!  Of course, there are a few “gotchas” along the way…like How do you define a best practice?  Who decides what a best practice is vs. a good or better practice?  What metrics do you use to benchmark yourself against the standard if you have one?

Let’s start with a definition.  There are many out there, but the one I like follows.

Best practices are proven, repeatable, documented techniques that deliver measurable performance improvements. Executives look to best practices to help them speed their progress toward performance optimization, and to guide them around pitfalls that might otherwise slow or even halt their initiatives.  Best practices:

• Align with strategy
• Reduce costs
• Improve productivity
• Enable better decision making
• Leverage/exploit technology
• Ensure control, compliance & risk management
• Promote collaboration within and beyond the enterprise

Now that we have a baseline, we’ll begin to explore “Best Practices” in more detail in later posts.  Stay tuned, this will get interesting.

One of our clients describes the shift from “sales-in” to “sales-out” reporting as not just an accounting or operational change … but a “company-wide culture shift”.  Sales teams focused on “sales-in” tend to drive up inventory levels and do not have a true understanding of underlying demand patterns.  A “sales-in” culture is insulated from the true customer and refers to the channel as the customer.  “Who’s your customer?” is always my first test in understanding the culture.  If the distributor is a “customer” instead of a “partner” then the culture is nearly always “sales-in”.

The adoption of “sales-out”, or SISO (matching sales-in transactions to sales-out transactions) revenue recognition, provides a powerful accounting mechanism to improve the management of your channel operation.  Executed properly, a SISO strategy will allow your organization to reduce inventory levels and improve demand forecasting.  But … a shift to SISO does not mean you’ve arrived at a “sales-out” culture; by itself, it does not truly provide visibility to the demand trends in your business. Understanding the end-customer is the critical shift in moving to a real “sales-out” culture.

A real “sales-out” culture embraces the true customer, the end-customer. A “sales-out” culture strives to understand the buying patterns of end-customers, understands the top performing and fastest growing customers, and segments its customers and their purchasing patterns.  Identifying the end-customer enables improved forecasting, better inventory management and more effective use of marketing spend.

So, if you want the right answer to the question… “who’s your customer?”, you’d better be “Sales-Out”!

When I took over my first channel management position, we developed a list of the important questions we couldn’t answer based on the limited data available to us … this became our “reality” list…our focus for operational improvement.

Over the past few year’s I’ve interviewed dozens of channel managers regarding the top issues that they face and I’ve compiled these responses into the following “seven realities” of channel management:

• We don’t know who’s selling our product.
• We don’t really know who’s buying it.
• We can’t measure channel performance in time to do anything about it.
• We can’t effectively cover the other 80% of channel partners.
• Our direct sales reps don’t trust the channel.
• Our channel wants more actionable leads and less program administration.
• We can’t determine the ROI for our incentive/marketing programs.

Maybe all seven aren’t true for your business … but a number of them are. Running a channel is a difficult job, and it’s that much more difficult if you don’t have the information that you need to run it.

Have you stepped back lately from the day-to-day challenges to compile your own “reality” list identifying the constraints that you and you’re organization are living under? It starts with identifying the questions you need answers to … the ones that you can’t get accurate and/or timely answers to. It starts by naming the information constraints that inhibit your team from achieving the results you’re chartered to accomplish.

Trading Partner relationships are the foundation of your channel. Distributors, resellers, end customers… accurately identifying, classifying and assigning your channel information is, in turn, the foundation of optimizing channel processes.  Given the importance of these relationships, some companies have chosen to create their own internally-focused view of their channel and partners.  In essence creating a silo of channel information and interactions. But silos don’t just keep things in, they keep things out as well. That’s OK if all you want to do is store the information because your channel is static, like grain.

I doubt that applies to most of your channels however.  Partners and customers change daily, your channel product mix changes, you decide to enter new markets or retire old ones…Channels are dynamic and fluid, and you need to manage channel relationship information in the same way.

So why limit yourself to the partners in your channel silo today? Rather than a silo, you need a shared registry of channel trading partners from around the globe. This registry should include enriched information about the partners and customers you already have, as well as those you may want to engage in the future. It should provide the opportunity for you to benefit from the activities of a wide variety of other global channel participants.  It should be dynamic and fluid and greater than the sum of the information from those using it.  So forget about silos…look instead for a shared warehouse with lots of loading docks and global traffic…a place where your channel partner relationship information grows and changes with your business.